10-QPeriod: Q3 FY2023

Dell Technologies Inc. Quarterly Report for Q3 Ended Oct 28, 2022

Filed December 5, 2022For Securities:DELL

Summary

Dell Technologies Inc. reported its third-quarter fiscal year 2023 results, showing a year-over-year decrease in total net revenue by 6% to $24.7 billion, largely driven by a decline in the Client Solutions Group (CSG) segment. Despite the revenue dip, the Infrastructure Solutions Group (ISG) segment demonstrated growth, with net revenue increasing by 12% to $9.6 billion. Profitability saw a significant improvement, with operating income increasing by 68% to $1.8 billion, primarily due to strong performance in ISG and a reduction in operating expenses. Non-GAAP operating income also rose by 22% to $2.4 billion. The company ended the quarter with a solid cash position and significant available borrowing capacity, indicating financial resilience amidst current macroeconomic uncertainties.

Financial Highlights

57 data points
Beta

Revenue

$24.72B

23.1% Gross Margin

Net Income

$245.00M

1.0% Net Margin

EPS (Diluted)

$0.33

Total Assets

$85.17B

Cash & Equivalents

$4.91B

Free Cash Flow

-$351.00M

Financial Statements
Beta
Revenue$24.72B
Cost of Revenue$19.01B
Gross Profit$5.71B
R&D Expenses$677.00M
SG&A Expenses$3.27B
Operating Expenses$3.94B
Operating Income$1.76B
Interest Expense$272.00M
Net Income$245.00M
EPS (Basic)$0.34
EPS (Diluted)$0.33
Shares Outstanding (Basic)728.00M
Shares Outstanding (Diluted)743.00M

Key Highlights

  • 1Total net revenue declined 6% year-over-year to $24.7 billion.
  • 2Infrastructure Solutions Group (ISG) revenue grew 12% to $9.6 billion, driven by strong performance in servers, networking, and storage.
  • 3Client Solutions Group (CSG) revenue decreased 17% due to declining demand, particularly in consumer offerings.
  • 4Operating income surged 68% to $1.8 billion, reflecting improved ISG profitability and cost management.
  • 5Non-GAAP operating income increased by 22% to $2.4 billion.
  • 6The company ended the quarter with $4.9 billion in cash and cash equivalents and $5.0 billion in remaining available borrowings under its revolving credit facility.
  • 7The company continues its share repurchase program, repurchasing $2.7 billion in Class C Common Stock during the first nine months of the fiscal year.

Frequently Asked Questions

The 6% year-over-year decrease in total net revenue was primarily driven by a 17% decline in the Client Solutions Group (CSG) segment, reflecting reduced demand for both commercial and consumer offerings. This was partially offset by growth in the Infrastructure Solutions Group (ISG).

Profitability showed significant improvement. Operating income increased by 68% to $1.8 billion, driven by strong performance in the ISG segment, a decrease in operating expenses, and a favorable impact from a reduction in amortization of intangible assets. Non-GAAP operating income also saw a substantial increase of 22% to $2.4 billion.

Dell Technologies maintained a strong liquidity position, with $4.9 billion in cash and cash equivalents and $5.0 billion in available borrowings under its revolving credit facility as of October 28, 2022. The company anticipates these resources will be sufficient to meet its operational needs, debt obligations, and strategic initiatives.

For ISG, Dell expects continued growth driven by demand for servers, networking, and storage solutions. For CSG, the company anticipates a decrease in net revenue for the remainder of the fiscal year due to ongoing demand challenges.